Pay extra principal on my mortgage or invest the extra funds?
I have 30 year mortgage with an interest rate of 3.45%. My loan balance is $134K. My loan ends in May 2051 if I don’t pay extra. I’ve been paying an addtl $300/month to the principal to shorten the length of the mortgage and save on interest. I had a friend say her financial advisor told her she should invest that extra money instead of paying down her mortgage. Is that what I should do? Should I be putting that extra money somewhere else? I’ll be 60 years old in June and am still working full-time.
Terry Says
You have a very low rate mortgage, and that makes a difference. No matter what you do, you’re going to be paying well into your retirement years. And I don’t know what you have in terms of retirement savings. But right now, you could be earning 4.8% interest in Treasury bills for 6 months. I’d hang on to the extra money and invest it for the time being, since every after paying taxes on the interest earned you’ll come out slightly ahead — and have more flexibility.
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